What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 145 added, 299 removed, 218 unchanged (67% of the section changed)

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and digital solutions (active and passive system controls and descriptive and predictive analytics).

We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four business units – Light Vehicle Drive Systems (Light Vehicle), Commercial Vehicle Drive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion Systems (Off-Highway) and Power Technologies, which is the center of excellence for sealing and thermal-management technologies that span all customers in our on-highway and off-highway markets.

We serve our global light vehicle, medium/heavy vehicle and off-highway markets through three business units – Light Vehicle Systems (Light Vehicle), Commercial Vehicle Systems (Commercial Vehicle) and Off-Highway Drive and Motion Systems (Off-Highway).

We have a diverse customer base and geographic footprint which minimizes our exposure to individual market and segment declines.

At September 30, 2024, we employed approximately 41,100 people and operated in 31 countries.

External sales by operating segment for the periods ended September 30, 2024 and 2023 are as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

At March 31, 2025, we employed approximately 39,300 people and operated in 31 countries.

External sales by operating segment for the periods ended March 31, 2025 and 2024 are as follows:

Three Months Ended March 31,

Light Vehicle

Commercial Vehicle

Power Technologies

See Note 18 to our consolidated financial statements in Item 1 of Part I for further financial information about our operating segments.

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Operational and Strategic Initiatives

Our enterprise strategy builds on our strong technology foundation and leverages our resources across the organization while driving a customer-centric focus, expanding our global markets, and delivering innovative solutions as we evolve into the era of vehicle electrification.

Our strategy builds on our strong technology foundation and leverages our resources across the organization while driving a customer-centric focus, expanding our global markets, and delivering innovative solutions for the mobility markets we serve.

Central to our strategy is leveraging our core operations.

This foundational element enables us to infuse strong operational disciplines throughout the strategy, making it practical, actionable, and effective.

It enables us to capitalize on being a major drive systems supplier across all three end mobility markets.

We are achieving improved profitability by actively seeking synergies across our engineering, purchasing, and manufacturing base.

We have strengthened the portfolio by acquiring critical assets, and we are utilizing our physical and intellectual capital to amplify innovation across the enterprise.

Leveraging these core elements can further expand the cost efficiencies of our common technologies and deliver a sustainable competitive advantage for Dana.

Driving customer centricity continues to be at the heart of who we are.

Putting our customers at the center of our value system is firmly embedded in our culture and is driving growth by focusing on customer relationships and providing value to our customers.

These relationships are strengthened as we are physically located where we need to be in order to provide unparalleled service, and we are prioritizing our customers’ needs as we engineer solutions that differentiate their products, while making it easier to do business with Dana by digitizing their experience.

We are achieving improved profitability by actively improving our cost structure and gaining efficiencies across all of our operations and functions.

Our customers remain at the center of our value system.

These relationships are strengthened as we are physically located where we need to be in order to provide unparalleled service.

We prioritize our customers’ needs as we engineer solutions that differentiate their products while making it easier to do business by streamlining our commercial organization.

Our customer-centric focus has uniquely positioned us to win more than our fair share of new business and capitalize on future customer outsourcing initiatives.

Expanding global markets means utilizing our global capabilities and presence to further penetrate growth markets, focusing on Asia due to its position as the largest mobility market in the world with the highest market growth rate as well as its lead in the adoption of new energy vehicles.

We are investing across various avenues to increase our presence in Asia Pacific by forging new partnerships, expanding inorganically, and growing organically.

We continue to operate in this region through wholly owned and joint ventures with local market partners.

We have recently made acquisitions that have augmented our footprint in the region, specifically in India and China.

All the while, we have been making meaningful organic investments to grow with existing and new customers, primarily in Thailand, India, and China.

These added capabilities have enabled us to target the domestic Asia Pacific markets and utilize the capacity for export to other global markets.

We continue to enhance and expand our global footprint, optimizing it to capture growth across all of our end markets.

Delivering innovative solutions enables us to capitalize on market growth trends as we evolve our core technology capabilities.

We are also focused on enhancing our physical products with digital content to provide smart systems, and we see an opportunity to become a digital systems provider by delivering software as a service to our traditional end customers.

This focus on delivering solutions based on our core technology is leading to new business wins and increasing our content per vehicle.

We have made significant investments - both organically and inorganically - allowing us to move to the next phase, which is to Lead electric propulsion .

We continue to deliver on our goal to accelerate vehicle electrification through both core Dana technologies and targeted strategic acquisitions and are positioned today to lead the market.

Our investments in electrodynamic expertise and technologies combined with Dana’s longstanding mechatronics capabilities has allowed us to develop and deliver fully integrated e-Propulsion systems that are power-dense and achieve optimal efficiency through the integration of the components that we offer due to our mechatronics capabilities.

With recent electric vehicle program awards, we are well on our way to achieving our growth objectives in this emerging market.

The development and implementation of our enterprise strategy is positioning Dana to grow profitably due to increased customer focus as we leverage our core capabilities, expand into new markets, develop and commercialize new technologies, including for electric vehicles.

Dana has embarked on a strategic plan to focus on core on-highway markets and accelerate value creation by improving its cost structure, increasing its efficiency, and creating a more focused and nimble Dana through the planned divestiture of our Off-Highway business.

Capital Structure Initiatives

In addition to investing in our business, we plan to prioritize a balanced allocation of capital while maintaining a strong balance sheet.

Shareholder return actions — When evaluating capital structure initiatives, we balance our growth opportunities and shareholder value initiatives with maintaining a strong balance sheet and returning capital to shareholders.

Shareholder return actions — When evaluating capital structure initiatives, we balance our growth opportunities with maintaining a strong balance sheet and returning capital to shareholders via dividends and share repurchases.

Except for three quarters in 2020, when we temporarily suspended dividends to common shareholders in response to the global COVID pandemic, we have paid quarterly dividends to our common shareholders since the first quarter of 2012.

We also utilize share repurchases to provide returns to our shareholders.

Financing actions — Our current portfolio of unsecured senior notes is structured such that no more than $460 of senior notes comes due in any calendar year, with no maturities until the second quarter of 2025.

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See Note 11 to our consolidated financial statements in Item 1 of Part I for additional information.

Cost Reduction Initiatives

During the fourth quarter of 2024, we announced further actions to support sustained long-term profitability and enhanced cash flow generation.

This includes substantial reduction in selling, general and administrative costs and aligning engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles.

We expect to deliver annualized savings of $300 through 2026.

Approximately $100 of the annualized savings is expected to come from headcount reduction actions, with approximately $75 of the headcount-related savings being realized through 2025.

See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Other Initiatives

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Any potential acquisition will be evaluated in the same manner we currently consider customer program opportunities and other uses of capital – with a disciplined financial approach designed to ensure profitable growth and increased shareholder value.

Through December 2024, we managed our operations globally through four operating segments.

Our Light Vehicle and Power Technologies segments primarily support light vehicle original equipment manufacturers (OEMs) with products for light trucks, SUVs, CUVs, vans and passenger cars.

Our Commercial Vehicle segment supports the OEMs of on-highway commercial vehicles (primarily trucks and buses), while our Off-Highway segment supports OEMs of off-highway vehicles (primarily wheeled vehicles used in construction, mining and agricultural applications).

In the first quarter of 2025, our Power Technologies segment was integrated into our Light Vehicle and Commercial Vehicle segments, streamlining the business, enhancing our go-to-market approach and serving our customers more efficiently.

The OEM-facing business was integrated into our Light Vehicle segment while the aftermarket business was integrated into our Commercial Vehicle segment.

Trends in Our Markets

We serve our customers in three core global end markets:

light vehicle, primarily full-frame trucks and SUVs;

commercial vehicle, including medium- and heavy-duty trucks and busses;

and off-highway, including construction, mining, and agriculture equipment.

light vehicle, primarily full frame trucks and SUVs; commercial vehicle, including medium-and heavy-duty trucks and busses; and off-highway, including construction, mining, and agriculture equipment.

Each of our end-markets has unique cyclical dynamics and market drivers.

These cycles are impacted by periods of investment where end-user vehicle fleets are refreshed or expanded in reaction to demand usage patterns, regulatory changes, or when the age of vehicles in service reach their useful life.

Key market drivers include regional economic growth rates;

cost and availability of end customer financing;

industrial output;

commodity production and pricing;

and residential and nonresidential construction rates.

Key market drivers include regional economic growth rates; cost and availability of end customer financing; industrial output; commodity production and pricing; and residential and nonresidential construction rates.

Our multi-market coverage and broad customer base help provide stability across the cycles while mitigating secular variability.

During 2023, we saw incremental improvements across our end markets despite continuing, but lessening, global supply chain disruptions.

The current tariff environment has resulted in increased uncertainty in the markets we serve.

Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle market versus the passenger-car segment.

Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles.

During 2023, light-truck markets improved across all regions except North America, which was negatively impacted by labor strikes during the fourth quarter of 2023 at the U.S.

operations of several original equipment manufacturers.

The outlook for the full year of 2024 reflects global light-truck production being relatively stable across all regions in comparison with the prior year.

During 2024, light-truck markets showed marginal improvement across all regions except Europe, which was down slightly from 2023.

The outlook for 2025 reflects global light-truck near-term production being relatively stable across all regions but demand risk later in the year due to tariff impacts.

Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles.

Key regional markets are North America, South America (primarily Brazil) and Asia Pacific.

During 2023, production of Class-8 trucks in North America increased 8% over 2022 reflecting increased demand driven by higher freight volumes and rates during the first half of 2023, with demand tapering during the second half of 2023 as freight volumes and rates trended downward.

The outlook for 2024 is for weakening demand with production down moderately from 2023 levels driven by lower year-over-year freight volumes and rates.

Medium-duty truck production in North America experienced a modest 9% year-over-year increase from 2022 to 2023.

The outlook for 2024 is for a moderate decrease in production over the prior year.

Outside of North America, production of medium- and heavy-duty trucks in South America declined 32% in 2023 reflecting weak economic conditions in the region.

The 2024 outlook for South America is for a moderate increase in production from 2023 as local economic conditions are expected to somewhat improve.

Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, increased 18% in 2023.

The 2024 outlook for Asia Pacific is for a modest decrease in production from the prior year.

During 2024, production of Class-8 trucks in North America decreased 3% from 2023 reflecting lower demand driven by lower freight volumes and rates.

Medium-duty truck production in North America experienced a modest 4% year-over-year increase from 2023.

The outlook for 2025 is for a moderate decrease in production from the prior year.

Outside of North America, production of medium- and heavy-duty trucks in South America increased 41% over 2023, reflecting improved economic conditions in the region.

The 2025 outlook for South America reflects relative stability compared to the prior year.

Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreased 5% in 2024.

The 2025 outlook for Asia Pacific is for a modest increase in production from the prior year.

Off-highway markets — Our off-highway business has a large presence outside of North America, with 65% of its 2024 sales coming from products manufactured in Europe; however, a large portion of these products are utilized in vehicle production outside the region.

The construction equipment segment of the off-highway market is closely related to global economic growth and infrastructure investment.

The global construction equipment market continued to rebound in 2023 with production up 5% over the prior year.

The outlook for 2024 is for moderately lower production levels in North America, Europe and South America, with relatively stable production levels in Asia Pacific.

The global construction equipment market softened in 2024 with production declining 5% from 2023.

The outlook for 2025 is for continued market weakness, with moderate production declines in North America and Europe and relative stability in Asia Pacific compared to the prior year.

End-user investment in the mining equipment segment is driven by prices for commodity products produced by underground mining.

The global mining equipment market has been mostly stable over the past several years as industry participants have maintained vehicle inventory levels to match commodity output, and this trend is expected to continue in 2024.

The global mining equipment market has been mostly stable over the past several years as industry participants have maintained vehicle inventory levels to match commodity output.

The outlook for 2025 is for a modest decline in global production from the prior year.

The agriculture equipment market is the third of our key off-highway segments.

Like the underground mining segment, investment in agriculture equipment is primarily driven by prices for commodities.

Like the underground mining segment, investment in agriculture equipment is primarily driven by prices for farm commodities.

Farm commodity price decreases in 2024 spurred a 8% decrease in agriculture equipment production.

The outlook for 2024 is for global end-market demand to soften, reflecting a moderate decrease from the prior year.

Foreign currency — With 54% of our year-to-date 2024 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations.

The outlook for 2025 is for a moderate decrease in global end-market demand relative to the prior year.

Foreign currency — With 55% of our first quarter 2025 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations.

The euro zone countries accounted for 46% of our year-to-date 2025 non-U.S.

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International currencies weakened against the U.S.

dollar in the first nine months of 2024, decreasing sales by $34, with the effects of a weaker Brazilian real, Chinese renminbi, Thai baht and Indian rupee, being partially offset by a stronger euro.

dollar in the first quarter of 2025, decreasing sales by $53, with the effects of a weaker euro, Brazilian real and Indian rupee, being partially offset by a stronger Thai baht.

Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its currency among other economic challenges.

Our Argentine operation supports our Light Vehicle operating segment.

Our sales in Argentina for the first nine months of 2024 of approximately $165 are 2% of our consolidated sales and our net asset exposure related to Argentina was approximately $67, including $21 of net fixed assets, at September 30, 2024.

Our sales in Argentina for the first quarter of 2025 of approximately $49 are 2% of our consolidated sales and our net asset exposure related to Argentina was approximately $53, including $21 of net fixed assets, at March 31, 2025.

During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy.

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Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes.

Lower year-over-year commodity prices increased earnings during the first nine months of 2024 by $17.

Material cost recovery pricing actions decreased earnings in the first nine months of 2024 by $45.

Higher year-over-year commodity prices decreased earnings during the first quarter of 2025 by $1.

Material cost recovery pricing actions decreased earnings in the first quarter of 2025 by $10.

Sales, Earnings and Cash Flow Outlook

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Adjusted EBITDA

$925 - $1,025

Net cash provided by operating activities

Purchases of property, plant and equipment

Free cash flow

Adjusted EBITDA and free cash flow are non-GAAP financial measures.

Adjusted free cash flow

Adjusted EBITDA and adjusted free cash flow are non-GAAP financial measures.

See the Non-GAAP Financial Measures discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S.

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The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

Our current 2024 sales outlook is $10,200 to $10,400, a decrease of $400 at the mid-point of the range from our prior guidance, reflecting weaker global commercial vehicle and agricultural and construction/mining equipment markets, a further reduction in electric-vehicle demand and lower customer demand associated with one of our full-frame light-truck programs.

Based on our current sales and exchange rate outlook for 2024, we expect overall stability in international currencies with a modest headwind to sales primarily due to a weaker Brazilian real, Chinese renminbi, Thai baht and Indian rupee, partially offset by a stronger euro.

On November 25, 2024, we announced that we are pursuing a sale of our Off-Highway business.

While the sale process continues to advance, there can be no assurance that it will result in a transaction.

Our 2025 outlook includes a full twelve months of operations for our Off-Highway business.

Our 2025 sales outlook is $9,525 to $10,025, reflecting declining global market demand and currency headwinds, partially offset by $150 of net new business backlog.

Based on our current sales and exchange rate outlook for 2025, we expect international currencies to be a modest headwind to sales primarily due to a weaker euro.

At sales levels in our current outlook for 2025, a 5% movement on the euro would impact our annual sales by approximately $90.

A 5% change on the Chinese renminbi, Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $20.

At our current sales outlook for 2024, we expect full year 2024 adjusted EBITDA to approximate $855 to $895, $50 lower from our prior guidance at the midpoint of the range.

Adjusted EBITDA Margin is expected to be 8.5% at the midpoint of our guidance range, a 50 basis-point improvement over 2023, reflecting higher margin net new business and improving operational performance being partially offset by the benefit of the material cost recovery tailwind experienced in 2023 dissipating in 2024, as commodity prices stabilize, and increased investment to support our electrification strategy.

We expect to generate free cash flow of approximately $100 at the midpoint of our guidance range, reflecting a year-over-year reduction in anticipated capital spending.

Summary Consolidated Results of Operations (Third Quarter, 2024 versus 2023)

Three Months Ended September 30,

At our current sales outlook for 2025, we expect full year 2025 adjusted EBITDA to approximate $925 to $1,025.

Adjusted EBITDA margin is 10.0% at the midpoint of our guidance range, a 140 basis-point improvement over 2024, reflecting the impact of significant cost savings actions and improved operational performance, partially offset by the impact of lower end-market demand and net material cost recoveries.

Our current guidance reflects tariff related cost impacts being largely recovered from our customers.

With commodity costs continuing to abate during 2025, Adjusted EBITDA margin will be negatively impacted by net material cost recoveries on both a dollar and percentage basis.

We expect to generate adjusted free cash flow of $225 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA, lower capital spending and improved working capital efficiency.

Summary Consolidated Results of Operations (First Quarter, 2025 versus 2024)

Three Months Ended March 31,

% of Net Sales

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Restructuring charges, net

Gain on disposal group previously held for sale

Loss on disposal group previously held for sale

Other income (expense), net

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Three Months Ended

September 30,

Amount of Change Due To

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Currency Effects

Acquisitions (Divestitures)

Organic Change

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South America

Sales in the third quarter of 2024 were $193 lower than in 2023.

Weaker international currencies decreased sales by $15, principally due to a weaker Brazilian real, partially offset by a stronger euro.

The organic sales decrease of $176, or 7%, primarily resulted from declining global construction/mining and agricultural equipment markets, lower global light-truck production volumes and lower medium/heavy-truck production volumes in North America and Asia Pacific, partially offset by the conversion of sales backlog.

Sales in the first quarter of 2025 were $383 lower than in 2024.

Weaker international currencies decreased sales by $53, principally due to a weaker euro, Brazilian real and Indian rupee, partially offset by a stronger Thai baht.

The organic sales decrease of $330, or 12%, primarily resulted from declining global construction/mining and agricultural equipment markets and lower light-truck and medium/heavy-truck production volumes in North America and Europe, partially offset by the conversion of sale backlog.

Pricing actions and recoveries, including material commodity price and inflationary costs adjustments, increased sales by $17.

The North America organic sales decrease of 3% was driven principally lower full-frame light-truck and medium- and heavy-duty truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and cost recovery actions.

Third quarter 2024 full-frame light-truck production was down 3%, Class 8 production was down 12% and Classes 5-7 was down 11% compared to 2023.

The North America organic sales decrease of 15% was driven principally by lower full-frame light-truck and medium- and heavy-duty truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and cost recovery actions.

First quarter 2025 full-frame light-truck production was down 9%, Class 8 production was down 22% and Classes 5-7 was down 24% compared to 2024.

Excluding currency effects, sales in Europe were down 14% compared with 2024.

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Organic sales in this operating segment were down 18% compared with 2024.

Excluding currency effects, sales in South America were up 16% compared with 2023, reflecting improved medium- and heavy-duty truck production volumes.

Excluding currency effects, sales in Asia Pacific decreased 12% compared to 2023, reflecting lower electric vehicle related product sales.

Cost of sales and gross margin — Cost of sales for the third quarter of 2024 decreased $202 when compared to 2023.

Excluding currency effects, sales in South America were up 2% compared to 2024, reflecting improved medium/heavy-duty truck production volumes.

Excluding currency effects, sales in Asia Pacific decreased 2% compared to 2024, reflecting declining off-highway markets, partially offset by modestly improving light- and medium/heavy-truck production.

Cost of sales and gross margin — Cost of sales for the first quarter of 2025 decreased $359 when compared to 2024.

Cost of sales as a percent of sales was 50 basis points lower than in the previous year.

Incremental margins from higher material cost savings of $31, operational efficiencies of $21, commodity cost decreases of $13, lower premium freight costs of $7, lower warranty expense of $5, lower incentive compensation expense of $4 and lower program launch costs of $2 were partially offset by unfavorable product mix, non-material inflation of $33 and higher spending on electrification initiatives of $2.

Incremental margins from cost reduction initiatives of $37, higher material cost savings of $28, operational efficiencies of $18, lower incentive compensation expense of $3 and lower premium freight costs of $1 were partially offset by unfavorable product mix, non-material inflation of $34, tariff-related impacts of $6, higher warranty expense of $3, higher spending on electrification initiatives of $1, higher commodity costs of $1 and higher program launch costs of $1.

Commodity costs are primarily driven by certain grades of steel and aluminum.

Non-material inflation includes higher labor, energy and transportation rates.

Gross margin of $245 for the third quarter of 2024 increased $9 from 2023.

Gross margin as a percent of sales was 9.9% in the third quarter of 2024, 110 basis points higher than in 2023.

Gross margin of $220 for the first quarter of 2025 decreased $24 from 2024.

Gross margin as a percent of sales was 9.4% in the first quarter of 2025, 50 basis points higher than in 2024.

The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above.

Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days.

With commodity costs abating during the third quarter of 2024, gross margin was negatively impacted by net material cost recoveries on both a dollar and percentage basis.

With commodity costs remaining relatively flat during the first quarter of 2025, gross margin was negatively impacted by net material cost recoveries on both a dollar and percentage basis.

The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Selling, general and administrative expenses (SG&A) — SG&A expenses in the third quarter of 2024 were $130 (5.3% of sales) as compared to $126 (4.7% of sales) in the third quarter of 2023.

SG&A expenses were $4 higher in the third quarter of 2024 primarily due to higher salary and employee benefit costs.

Amortization of intangibles — Amortization expense was $3 in both the third quarters of 2024 and 2023.

Selling, general and administrative expenses (SG&A) — SG&A expenses in the first quarter of 2025 were $132 (5.6% of sales) as compared to $139 (5.1% of sales) in the first quarter of 2024.

SG&A expenses were $7 lower in the first quarter of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Amortization of intangibles — Amortization expense was $3 in both the first quarter of 2025 and the first quarter of 2024.

See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information.

Restructuring charges, net — Net restructuring charges were $24 in the third quarter of 2024 and $17 in the third quarter of 2023 .

Restructuring charges, net — Net restructuring charges were $5 in both the first quarter of 2025 and the first quarter of 2024.

See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Gain on disposal group previously held for sale — In February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l.

Loss on disposal group previously held for sale — In February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l.

We classified the disposal group as held for sale in the first quarter of 2024.

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Three Months Ended

September 30,

Non-service cost components of pension and OPEB costs

Government assistance

Foreign exchange loss

Strategic transaction expenses

Loss on sale of property, plant and equipment

Other income (expense), net

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives.

Strategic transaction expenses in the third quarter of 2024 and 2023 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.

Interest income and interest expense — Interest income was $4 in the third quarter of 2024 and $5 in the third quarter of 2023.

Interest expense was $40 in the third quarter of 2024 and $41 in the third quarter of 2023, reflecting higher average outstanding borrowings in 2024 being offset by lower average interest rates.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.8% in the third quarter of 2024 and 6.1% in the third quarter of 2023.

Income tax expense — We reported income tax expense of $43 and $33 for the third quarter of 2024 and 2023, respectively.

Our effective tax rates were 83% and 60% for the third quarter of 2024 and 2023, respectively.

Our effective income tax rates vary from the U.S.

federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S.

and withholding taxes related to repatriations of international earnings.

The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Equity in earnings of affiliates — Net earnings from equity investments was $2 in the third quarter of 2024 and $3 in the third quarter of 2023.

Net earnings from Dongfeng Dana Axle Co., Ltd.

(DDAC) were de minimis in the third quarter of 2024 and $1 in the third quarter of 2023.

Summary Consolidated Results of Operations (Year-to-Date, 2024 versus 2023)

Nine Months Ended September 30,

% of Net Sales

Increase/ (Decrease)

Cost of sales

Selling, general and administrative expenses

Amortization of intangibles

Restructuring charges, net

Loss on disposal group previously held for sale

Other income (expense), net

Earnings before interest and income taxes

Loss on extinguishment of debt

Interest income

Interest expense

Earnings before income taxes

Income tax expense

Equity in earnings of affiliates

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Net income attributable to the parent company

Sales — The following table shows changes in our sales by geographic region.

Nine Months Ended

September 30,

Amount of Change Due To

Increase/ (Decrease)

Currency Effects

Acquisitions (Divestitures)

Organic Change

North America

South America

Sales in 2024 were $112 lower than in 2024.

Weaker international currencies decreased sales by $34, principally due to a weaker Brazilian real, Chinese renminbi, Thai baht and Indian rupee, partially offset by a stronger euro.

The organic sales decrease of $74, or 1%, resulted from declining global construction/mining and agricultural equipment markets, which were partially offset by having a full nine months of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year and the conversion of sales backlog.

Pricing actions and recoveries, including material commodity price and inflationary cost adjustments, increased sales by $68.

The North America organic sales increase of 5% was driven principally by having a full nine months of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year, the conversion of sales backlog and net customer pricing and cost recovery actions.

Excluding currency effects, sales in Europe were down 10% compared with 2023.

With our significant Off-Highway presence in the region, weaker construction/mining and agricultural equipment markets were a major factor.

Organic sales in this operating segment were down 11% compared with the first nine months of 2023.

Excluding currency effects, sales in South America were up 15% compared with 2023, reflecting improved medium- and heavy-duty truck production volumes.

Excluding currency effects, sales in Asia Pacific decreased 6% compared to 2023, reflecting lower electric vehicle related product sales.

Cost of sales and gross margin — Cost of sales for the nine months of 2024 decreased $120, or 2%, when compared to 2023.

Cost of sales as a percent of sales was 30 basis points lower than in the previous year.

Incremental margins resulting from higher material cost savings of $99, operational efficiencies of $39, lower premium freight costs of $29, lower commodity costs of $17, lower program launch costs of $10, lower incentive compensation expense of $7 and lower warranty expense of $3 were partially offset by unfavorable product mix, non-material inflation of $129 and higher spending on electrification initiatives of $17.

Commodity costs are primarily driven by certain grades of steel and aluminum.

Non-material inflation includes higher labor, energy and transportation rates.

Gross margin of $744 for the first nine months of 2024 increased $8 from 2023.

Gross margin as a percent of sales was 9.4% in the first nine months of 2024, 30 basis points higher than in 2023.

The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above.

Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days.

With commodity costs abating during the first nine months of 2024, gross margin was negatively impacted by net material cost recoveries on both a dollar and percentage basis.

The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Selling, general and administrative expenses (SG&A) — SG&A expenses in the first nine months of 2024 were $401 (5.0% of sales) as compared to $410 (5.1% of sales) in the first nine months of 2023.

SG&A expenses were $9 lower in the first nine months of 2024 due to lower incentive compensation, lower professional services and consulting costs and lower marketing expenditures.

Amortization of intangibles — Amortization expense was $10 in the first nine months of both 2024 and 2023.

See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information.

Restructuring charges, net — Net restructuring charges were $41 in the first nine months of 2024 and $21 in the first nine months of 2023.

See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Loss on disposal group previously held for sale — I n February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l.

We classified the disposal group as held for sale in the first quarter of 2024.

The transaction was not completed by the date set forth in the definitive agreement.

The disposal group is no longer held for sale.

See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Other income (expense), net — The following table shows the major components of other income (expense), net.

Nine Months Ended

September 30,

Non-service cost components of pension and OPEB costs

Government assistance

Foreign exchange loss

Foreign exchange gain (loss)

Strategic transaction expenses

Loss on sale of property, plant and equipment

Gain (loss) on sale of property, plant and equipment

Other income (expense), net

Strategic transaction expenses in the first nine months of 2024 and 2023 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.

Loss on extinguishment of debt — On June 9, 2023 we redeemed $200 of our April 2025 Notes.

The $1 loss on extinguishment of debt is comprised of the write-off of previously deferred financing costs associated with the April 2025 Notes.

See Note 11 of our consolidated financial statements in Item 1 of Part I for additional information.

Interest income and interest expense — Interest income was $10 in the first nine months of 2024 and $14 in the first nine months of 2023.

Interest expense increased from $114 in the first nine months of 2023 to $118 in the first nine months of 2024, due to higher average outstanding borrowings and higher average interest rates.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.7% in the first nine months of 2024 and 5.6% in the first nine months of 2023.

Income tax expense — We reported income tax expense of $134 and $118 for the first nine months of 2024 and 2023, respectively.

Our effective tax rates were 87% and 58% for the first nine months of 2024 and 2023, respectively.

During the first nine months of 2024, we recorded tax expense of $11 for valuation allowances related to foreign jurisdictions and tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions.

During the first nine months of 2023, we recorded tax expense of $19 for income tax reserves associated with prior tax years in foreign jurisdictions.

Strategic transaction expenses during the three months ended March 31, 2025 were primarily attributable to investigating the potential sale of our Off-Highway business.

Interest income and interest expense — Interest income was $3 in the first quarter of 2025 and $4 in the first quarter of 2024.

Interest expense was $39 in both the first quarter of 2025 and the first quarter of 2024, reflecting higher average outstanding borrowings in 2025 being offset by lower average interest rates.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.5% in the first quarter of 2025 and 5.8% in the first quarter of 2024.

Income tax expense — We reported income tax expense of $8 and $37 for the first quarter of 2025 and 2024, respectively.

Our effective tax rates were 22% and 106% for the first quarter of 2025 and 2024, respectively.

During the first quarter of 2025, we recorded a tax benefit of $19 due to a basis difference in a foreign subsidiary as a result of a change in tax status and $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions.

During the first quarter of 2024, we recorded tax expense of $11 for valuation allowances related to foreign locations.

Our effective income tax rates vary from the U.S.

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The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Equity in earnings of affiliates — Net earnings from equity investments was $7 in the first nine months of 2024 and $6 in the first nine months of 2023.

Equity in earnings of affiliates — Net earnings from equity investments was $2 in both the first quarter of 2025 and the first quarter of 2024 .

Net earnings from Dongfeng Dana Axle Co., Ltd.

(DDAC) were $1 in both the first nine months of 2024 and 2023.

(DDAC) were de minimis in both the first quarter of 2025 and the first quarter of 2024.

Segment Results of Operations (2025 versus 2024)

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Segment EBITDA Margin

Segment EBITDA

Segment EBITDA Margin

Volume and mix

Currency effects

Light Vehicle sales in the third quarter of 2024, exclusive of currency effects, were 5% lower than 2023 reflecting mixed global markets, partially offset by the conversion of sales backlog and the benefit of net customer pricing and cost recovery actions.

Year-over-year third-quarter North America full-frame light-truck production decreased 3% while light-truck production in Europe and Asia Pacific decreased 3% and 4%, respectively.

Year-over-year light-truck production in South America was up 15%.

Light Vehicle sales in the first nine months of 2024, exclusive of currency effects, were 5% higher than 2023, reflecting a full nine months of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year, the conversion of sale backlog and the benefit of net customer pricing and cost recovery actions, partially offset by mixed global markets.

Year-over-year North America full-frame light-truck production decreased 1% while light-truck production in Europe decreased 1% in this year’s first nine months.

Year-over-year South America and Asia Pacific light-truck production increased 3% and 1%, respectively, in this year’s first nine months.

Net customer pricing and cost recovery actions increased year-over-year sales by $19 and $73 in this year’s third quarter and first nine months, respectively.

Light Vehicle segment EBITDA increased $3 and $39 in the third quarter and first nine months of 2024, respectively, from the comparable periods of 2023.

Lower sales volumes decreased year-over-year earnings by $27 (38% decremental margin) in the third quarter of 2024.

Higher sales volumes provided a year-over-year earnings benefit of $11 (13% incremental margin) in the first nine months of 2024.

The year-over-year performance-related earnings increase in the third quarter of 2024 was driven by net customer pricing and cost recovery actions of $19, operational efficiencies of $14, commodity cost decreases of $12, higher material cost savings of $11, lower premium freight costs of $4, lower incentive compensation expense of $2, lower program launch costs of $1 and lower warranty expense of $1.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $23 and higher spending on electrification initiatives of $11.

The year-over-year performance-related earnings increase during the first nine months of 2024 was driven by net customer pricing and cost recovery actions of $73, higher material cost savings of $36, operational efficiencies of $34, lower premium freight costs of $14, lower program launch costs of $9, lower incentive compensation expense of $3, commodity cost decreases of $3 and lower warranty expense of $2.

Offsetting these performance-related earnings increases were inflationary cost increases of $112 and higher spending on electrification initiatives of $32.

Light Vehicle sales in the first quarter of 2025, exclusive of currency effects, were 10% lower than 2024 reflecting lower production volumes in North America and Europe partially offset by the benefit of net customer pricing and cost recovery actions and the conversion of sales backlog.

Year-over-year North America full-frame light-truck production decreased 9% and year-over-year light-truck production in Europe decreased 5%.

Net customer pricing and cost recovery actions increased year-over-year sales by $14.

Light Vehicle segment EBITDA decreased by $10 compared to the prior year.

Lower sales volumes decreased year-over-year earnings by $36 (24% decremental margin).

The year-over-year performance-related earnings increase was driven by cost reduction initiatives of $17, net customer pricing and cost recovery actions of $14, higher material cost savings of $12, lower incentive compensation expense of $4 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $7.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $20, tariff-related impacts of $4, higher premium freight costs of $2, higher program launch costs of $1 and higher warranty expense of $1.

Commercial Vehicle

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Segment EBITDA Margin

Segment EBITDA

Segment EBITDA Margin

Volume and mix

Currency effects

Commercial Vehicle sales in the third quarter of 2024, exclusive of currency effects, were 5% lower than 2023 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost recovery actions.

Year-over-year Class 8 production in North America was down 12% while Classes 5-7 was down 11% in this year’s third quarter.

Year-over-year medium/heavy-truck production in Europe and Asia pacific were down 15% and 3%, respectively, while medium/heavy-truck production in South America was up 51%.

Commercial Vehicle sales in the first nine months of 2024, exclusive of currency effects, were 1% lower than 2023 reflecting mixed global markets being partially offset by the conversion of sales backlog and net customer pricing and cost recovery actions.

Year-over-year Class 8 production in North America was down 2% while Classes 5-7 was up 1% in this year’s first nine months.

Year-over-year medium/heavy-truck production in Europe and Asia Pacific were down 12% and 1%, respectively, while medium/heavy-truck production in South America was up 41%.

Net customer pricing and cost recovery actions increased year-over-year sales by $6 and $12 in this year’s third quarter and first nine months, respectively.

Commercial Vehicle segment EBITDA decreased $3 and $8 in the third quarter and first nine months of 2024, respectively, from the comparable periods of 2023.

Lower sales volumes and unfavorable product mix decreased earnings by $21 (68% decremental margin) in the third quarter of 2024.

Lower sales volumes and unfavorable product mix decreased earnings by $46 (144% decremental margin) in the first nine months of 2024.

The year-over-year performance-related earnings increase in the third quarter of 2024 was driven by net customer pricing and cost recovery actions of $6, lower spending on electrification initiatives of $8, higher material cost savings of $6, commodity cost decreases of $3, lower incentive compensation expense of $2, lower program launch costs of $1 and lower premium freight costs of $1.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $5 and operational inefficiencies of $3.

The year-over-year performance-related earnings increase in the first nine months of 2024 was driven by lower spending on electrification initiatives of $24, higher material cost savings of $21, net customer pricing and cost recovery actions of $12, lower premium freight costs of $10, lower incentive compensation expense of $5 and commodity cost decreases of $2.

Partially offsetting these performance-related earnings increases were operational inefficiencies of $18, inflationary cost increases of $12 and higher warranty expense of $4.

Segment EBITDA

Segment EBITDA Margin

Segment EBITDA

Segment EBITDA Margin

Volume and mix

Currency effects

Off-Highway sales in the third quarter of 2024, exclusive of currency and divestiture effects, were 15% lower than 2023 reflecting softening global markets and the impact of net customer pricing and cost recovery actions.

Year-over-year global construction/mining equipment and agricultural equipment markets are softening, especially in Europe.

Year-over-year third quarter construction/mining equipment and agricultural equipment production in Europe were down 12% and 24%, respectively.

Off-Highway sales in the first nine months of 2024, exclusive of currency and divestiture effects, were 11% lower than 2023 reflecting softening global markets and the impact of net customer pricing and cost recovery actions.

Year-over-year global construction/mining equipment and agricultural equipment markets are softening, especially in Europe.

Year-over-year first nine months construction/mining equipment and agricultural equipment production in Europe were down 12% and 24%, respectively.

Net customer pricing and cost recovery actions decreased year-over-year sales by $6 and $22 in this year’s third quarter and first nine months, respectively.

Off-Highway segment EBITDA decreased $7 and $25 in the third quarter and first nine months of 2024, respectively, from the comparable periods of 2023.

Lower sales volumes decreased year-over-year earnings by $25 (24% decremental margin) in the third quarter of 2024.

Lower sales volumes decreased year-over-year earnings by $68 (28% decremental margin) in the first nine months of 2024.

The year-over-year performance-related earnings increase in the third quarter of 2024 was driven by operational efficiencies of $12, higher material cost savings of $7, lower warranty expense of $4, lower premium freight costs of $2, commodity cost decreases of $2 and lower incentive compensation expense of $1.

Partially offsetting these performance-related earnings increases were net customer pricing and cost recovery actions of $6, inflationary cost increases of $3 and higher program launch costs of $1.

The year-over-year performance-related earnings increase in the first nine months of 2024 was driven by higher material costs savings of $24, operational efficiencies of $22, commodity cost decreases of $12, lower premium freight costs of $6, lower warranty expense of $6 and lower incentive compensation expense of $1.

Partially offsetting these performance-related earning increases were net customer pricing and cost recovery actions of $22, inflationary cost increases of $4 and higher program launch costs of $1.

Power Technologies

Segment EBITDA

Segment EBITDA Margin

Commercial Vehicle sales in the first quarter of 2025, exclusive of currency effects, were 9% lower than 2024 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost recovery actions.

Year-over-year Class 8 production in North America was down 22% while Classes 5-7 was down 24% in this year’s first quarter.

Year-over-year medium/heavy-truck production in Europe was down 11% while year-over-year medium/heavy-truck production in South America and Asia Pacific were up 7% and 4%, respectively.

Net customer pricing and cost recovery actions increased year-over-year sales by $6.

Commercial Vehicle segment EBITDA increased by $11 compared to the prior year.

Lower sales volumes decreased year-over-year earnings by $19 (30% decremental margin).

The year-over-year performance-related earnings increase was driven by cost reduction initiatives of $11, higher material cost savings of $8, net customer pricing and cost recovery actions of $6, lower premium freight costs of $2, lower incentive compensation expense of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $17.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $8, commodity cost increases of $2, tariff-related impacts of $2 and higher spending on electrification initiatives of $1.

Segment EBITDA

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Currency effects

Power Technologies primarily serves the light-vehicle market but also sells product to the medium/heavy-truck and off-highway markets.

Power Technologies sales in the third quarter of 2024, exclusive of currency effects, were 4% higher than 2023, reflecting the conversion of sales backlog, partially offset by weaker global markets and the impact of net customer pricing actions.

Year-over-year light vehicle engine production in North America and Europe were down 5% and 7%, respectively.

Power Technologies sales in the first nine months of 2024, exclusive of currency effects, were 5% higher than 2023, reflecting the conversion of sales backlog and the benefit of net customer pricing actions, partially offset by weaker global markets.

Year-over-year light vehicle engine production in North America and Europe were down 1% and 4%, respectively.

Net customer pricing and cost recovery actions decreased year-over-year sales by $3 in this year’s third quarter and increased year-over-year sales by $5 in this year’s first nine months.

Power Technologies third-quarter segment EBITDA decreased $2 and first nine months segment EBITDA increased $5 from the comparable periods of 2023.

The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in both the third quarter and first nine months of 2024.

The year-over-year performance-related earnings decrease in the third quarter of 2024 was driven by commodity cost increases of $4, inflationary cost increases of $4 and net customer pricing and cost recovery actions of $3.

These performance-related earnings decreases were partially offset by higher material costs savings of $7, lower spending on electrification initiatives of $1, lower incentive compensation expense of $1 and lower program launch costs of $1.

The year-over-year performance-related earnings increase in the first nine months of 2024 was driven by higher material cost savings of $18, net customer pricing and cost recovery actions of $5, lower program launch costs of $2, lower incentive compensation expense of $2 and lower spending on electrification initiatives of $1.

These performance-related earnings increases were partially offset by operational inefficiencies of $11, inflationary cost increases of $9, higher premium freight costs of $1 and higher warranty expense of $1.

Off-Highway sales in the first quarter of 2025, exclusive of currency effects, were 18% lower than 2024 reflecting weaker global markets and the impact of net customer pricing and cost recovery actions partially offset by the conversion of sales backlog.

Year-over-year global construction/mining equipment and agricultural equipment markets continued to soften, especially in Europe.

Year-over-year first quarter construction/mining equipment and agricultural equipment production in Europe were down 10% and 5%, respectively.

Net customer pricing and cost recovery actions decreased year-over-year sales by $3.

Off-Highway segment EBITDA decreased by $36 compared to the prior year.

Lower sales volumes decreased year-over-year earnings by $35 (26% decremental margin).

The year-over-year performance-related earnings increase was driven by higher material cost savings of $8, lower commodity costs of $1, lower incentive compensation expense of $1, lower premium freight cost of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $3.

Largely offsetting these performance-related earnings increases were inflationary cost increases of $8, net customer pricing and cost recovery actions of $3 and higher warranty expense of $2.

Non-GAAP Financial Measures

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Three Months Ended

Nine Months Ended

September 30,

Equity in earnings of affiliates

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Interest expense, net

Loss on extinguishment of debt

Distressed supplier costs

Supplier capacity charge adjustment

Loss on disposal group previously held for sale

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See Note 18 to our consolidated financial statements in Item 1 of Part I for additional details.

Free Cash Flow

We have defined free cash flow as cash provided by operating activities less purchases of property, plant and equipment.

We believe free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations.

Free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP.

Free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table reconciles net cash flows provided by operating activities to free cash flow.

Adjusted Free Cash Flow

We have defined adjusted free cash flow as cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment.

We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations.

Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP.

Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table reconciles net cash flows provided by operating activities to adjusted free cash flow.

Three Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities

Net cash used in operating activities

Purchases of property, plant and equipment

Free cash flow

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at September 30, 2024:

Proceeds from sale of property, plant and equipment

Adjusted free cash flow

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at March 31, 2025:

Cash and cash equivalents

Deposits supporting obligations

Available cash

Additional cash availability from Revolving Facility

Total liquidity

We had availability of $1,130 at September 30, 2024 under our Revolving Facility after deducting $10 of outstanding borrowings and $10 of outstanding letters of credit.

The components of our September 30, 2024 consolidated cash balance were as follows:

We had availability of $1,025 at March 31, 2025 under our Revolving Facility after deducting $115 of outstanding borrowings and $10 of outstanding letters of credit.

The components of our March 31, 2025 consolidated cash balance were as follows:

Cash and cash equivalents

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Beyond these restrictions, there are practical limitations on repatriation of cash from certain subsidiaries because of the resulting tax withholdings and subsidiary by-law restrictions which could limit our ability to access cash and other assets.

At September 30, 2024, we were in compliance with the covenants of our financing agreements.

At March 31, 2025, we were in compliance with the covenants of our financing agreements.

Under the Revolving Facility and our senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types.

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While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.

In November 2024, we announced we are exploring the divestiture of our Off-Highway business.

We expect that a portion of any cash proceeds received from a sale transaction would be used to repay or redeem a portion of our outstanding indebtedness.

The following table summarizes our consolidated statement of cash flows:

Nine Months Ended

September 30,

Three Months Ended

Cash used for changes in working capital

Other cash provided by operations

Net cash provided by operating activities

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Operating activities — Exclusive of working capital, other cash provided by operations was $104 in 2025 and $149 in 2024.

The year-over-year increase is primarily attributable to higher operating earnings in 2024.

The year-over-year decrease is primarily attributable to lower operating earnings in 2025.

Working capital used cash of $141 and $251 in 2025 and 2024.

Cash of $77 and $243 was used to finance receivables in 2024 and 2023, respectively.

Cash of $42 and $116 was used to fund higher inventory levels in 2024 and 2023, respectively.

Decreases in accounts payable and other net liabilities used cash of $142 in 2024 while increases in accounts payable and other net liabilities provided cash of $190 in 2023.

Investing activities — Expenditures for property, plant and equipment were $227 and $359 during 2024 and 2023.

Elevated capital spending in 2023 was driven by the high volume of new program launches in that year.

Financing activities — During 2024 and 2023, we had net borrowings of $10 and net repayments of $25 on our Revolving Facility, respectively.

Cash of $181 and $169 was used to finance receivables in 2025 and 2024.

Cash of $37 and $18 was used to fund higher inventory levels in 2025 and 2024.

Increases in accounts payable and other net liabilities provided cash of $77 in 2025 while decreases in accounts payable and other net liabilities used cash of $64 in 2024.

Investing activities — Expenditures for property, plant and equipment were $75 and $70 in 2025 and 2024.

The increase in capital spending during 2025 is primarily due to the year-over-year calendarization of capital spending being higher in this year’s first quarter.

Financing activities — During 2025 and 2024, we had net borrowings on our Revolving Facility of $115 and $15, respectively.

During 2024, we paid the $25 note payable due to the former owners of SME S.p.A.

During 2023, we completed the issuance of €425 of our July 2031 Notes, paying financings costs of $7.

Also during 2023, we redeemed $200 of our April 2025 Notes.

During 2023, we paid financing costs of $2 to amend our credit and guaranty agreement, extending the Revolving Facility maturity to March 14, 2028.

We used cash of $15 for dividend payments to common stockholders during both 2025 and 2024.

Distributions to noncontrolling interests totaled $1 in 2025 and $3 in 2024.

Hydro-Québec made cash contributions to Dana TM4 of $18 in both 2024 and 2023.

Hydro-Québec made cash contributions to Dana TM4 of $9 in 2024.

During 2024, we received $11 from Hydro-Québec, which represents deferred purchase consideration associated with their acquisition of a 45% ownership interest in SME S.p.A.

Off-Balance Sheet Arrangements

There have been no material changes at September 30, 2024 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2023 Form 10-K.

There have been no material changes at March 31, 2025 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2024 Form 10-K.

Contractual Obligations

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See Item 7 in our 2024 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2024 Form 10-K for our significant accounting policies.

There were no changes to our critical accounting estimates in the nine months ended September 30, 2024.

See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first nine months of 2024.

There were no changes to our critical accounting estimates in the three months ended March 31, 2025.

See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first three months of 2025.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis